Our country's debt situation

We need to properly evaluate the point our country has reached regarding borrowing in light of the economic policies implemented in Turkey recently.

According to the data from the Ministry of Treasury and Finance:

"Turkey's Gross External Debt Stock" stood at 506.8 billion US Dollars as of March 31, 2024, with the ratio of the stock to the national income being 43.8 percent. On the same date, "Turkey's Net External Debt Stock" stood at 283.9 billion US Dollars, with the ratio of the stock to the national income being 24.5 percent.

According to this data, the country's borrowing level is seen as reasonable compared to developing countries.

One reason for this is that by keeping the exchange rate low and inflating the income figures, Turkey's Gross External Debt Stock is made to appear lower. However, if the exchange rate were where it should be, the Gross External Debt Stock would have increased significantly. In periods when the exchange rate rises suddenly, an increase in this figure is observed, and consequently, the country's risk premium also gradually increases.

Secondly, a portion of Turkey's external debt is not reflected in the records under guarantees. Turkey has guaranteed debts abroad within the scope of public-private partnerships. These stand as a burden on the public budget and the country with each passing day. However, these debts are not visible in the data we shared above. Unfortunately, as we have stated in many previous articles, these debts will cause future generations to be crushed under this debt burden.

As we have always said, in the finance and economic policy of the Atatürk era, there was external debt remaining from the Ottoman Empire, and the vast majority of this debt was paid off during the Atatürk era, making the Republic of Turkey debt-free.

The debt situation of the citizens, unfortunately, is worse. Citizens rely on credit cards for their expenses and are unable to pay them off. In a high-interest environment, the debt situation of the citizens is deteriorating further. Citizens and small tradesmen cannot foresee how they will proceed in this high-credit environment. It is clear that citizens are struggling to make ends meet. These firms are stagnating, slowly regressing, and cannot see the light at the end of the tunnel.

It is important to save the citizens and the state from this debt trap and to remember the finance and economic policies of the early Republican era.